In a significant development within the fintech landscape, Cred, a leading player in the digital payments arena, has been granted in-principle approval by the Reserve Bank of India (RBI) to operate as a payment aggregator (PA). This pivotal milestone underscores Cred’s growing influence in facilitating seamless financial transactions and further cements its position as a prominent player in the digital payments ecosystem.
Understanding the Role of a Payment Aggregator (PA)
As a payment aggregator, Cred will assume the crucial responsibility of managing and facilitating the movement of customers’ funds to merchants. This designation empowers companies to streamline payment processes, enhancing efficiency and reliability in financial transactions.
It’s important to note that the in-principle approval granted by the RBI is not a final license but signifies a significant step towards obtaining official recognition. The formal licensing process typically spans six to twelve months, during which entities with in-principle approval can continue their operations unless instructed otherwise by the RBI.
Cred’s Diverse Portfolio and Market Influence
Headquartered in Bengaluru, Cred has emerged as the premier third-party application for credit card bill payments in India. Beyond its core offering, the company boasts a diverse portfolio encompassing e-commerce ventures, vehicle management solutions, and curated travel packages, among other products and services. This multifaceted approach underscores Cred’s commitment to providing comprehensive financial solutions tailored to the evolving needs of its user base.
Under the leadership of Kunal Shah, Cred has witnessed exponential growth, boasting over 15 million active customers. Furthermore, the company has solidified its position as the fourth-largest player in the Unified Payments Interface (UPI) segment, capturing a significant 2.3 percent volume market share on India’s foremost digital payments platform.
Expansion into Wealth Management
In a strategic move aimed at diversifying its offerings, Cred recently ventured into the wealth management sphere through the acquisition of Kuvera, a prominent player in the wealth management space. Kuvera’s extensive clientele, comprising approximately three lakh affluent customers, complements Cred’s foray into wealth management seamlessly. Notable offerings include mutual funds, fixed deposits, systematic investment plans (SIPs), international equities, pension funds, and digital gold, among others.
Financial Performance and Growth Trajectory
Cred’s robust financial performance underscores its trajectory of sustained growth and market resilience. The company reported a staggering revenue of Rs 1,400 crore from operations for the fiscal year 2022-23, marking a remarkable 256 percent increase from the previous fiscal year. Despite marginally widening losses amounting to Rs 1,347 crore in FY23, representing a 5 percent increase, Cred has demonstrated effective cost management strategies, notably reducing customer acquisition costs by approximately 80 percent over the past four years.
Industry Landscape and Regulatory Developments
The approval granted to Cred comes amid a broader trend of payment gateway companies receiving RBI’s endorsement as payment aggregators. Notable entities in this regard include Razorpay, CC Avenue, Cashfree, Zoho, Tata Pay, and EnKash, underscoring the regulatory momentum and the evolving landscape of digital payments in India.
As Cred embarks on its journey towards obtaining the final license as a payment aggregator, the company remains steadfast in its commitment to fostering financial inclusivity, innovation, and reliability in the digital payments sphere. With a proven track record of delivering value-added services and driving technological advancements, Cred is poised to redefine the contours of financial services in the digital era.
